Bailout plan could cost $1 trillion

Posted By Blake Hounshell Friday, September 19, 2008 - 8:56 AM Share

This just in: Hank Paulson's toxic waste dump could cost U.S. taxpayers as much as $1 trillion, Politico reports.

Keep in mind, however, that if all goes well, U.S. taxpayers could actually make money on this deal, though it's probably highly unlikely.

UPDATE: Here's Paulson's statement from today's press conference.

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DRAKE

9:27 AM ET

September 19, 2008

Go well

This could get the taxpayers to make money ? Because intelligent management has led to this crisis, right?

I'm highly septical this is the right solution ( I hope, I'll be proven wrong), but the dice have been throw so will see

 

JGARZIK

9:33 AM ET

September 19, 2008

Illiquid gold

With the funnies of mark-to-market, it's entirely possible that we buy securities for pennies on the dollar, as a preferred alternative to nationalizing all the banks that hold such securities (and getting the banks themselves for pennies on the dollar).

It is unlikely that home prices have declined 90% or more, as have some mortgage-backed securities.

In an illiquid market, prices can plummet rapidly due to the temporary inability of a market to function.

I blogged on this earlier today.

Also, this just in: Tyler Cowen over at Marginal Revolution explains by banning short sales can be unwise. Currently, short sales of certain financial stocks are banned, but shorting elsewhere is permitted.

Jeff @ Armchair FP

 

JGARZIK

5:35 PM ET

September 19, 2008

Uncle Sam's Sovereign Wealth Fund

The talking heads on CNBC are noting cynically that Hank Paulson is now the "head of the world's largest hedge fund", and [half-]joked about the creation of Uncle Sam's Sovereign Wealth Fund.

The government is essentially making a market by purchasing distressed MBS's at prices below their "real" value, establishing a price floor. One talking head said 65 cents on the dollar was a price being thrown about.

Jeff @ Armchair FP

 

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